PrivatBank Writes Off UAH 140bn in Non-Performing Loans: NPL Ratios, Taxes, and System-Wide Impact
In December 2025, state-owned PrivatBank ceased recognition of assets linked to its former owners totaling UAH 140 billion. This step significantly altered the financial profile of the country’s largest bank: the share of non-performing assets in its portfolio dropped several times, and the state budget received additional tax revenues. At the same time, for clients and the bank’s day-to-day operations, the decision changes almost nothing it primarily concerns legacy issues dating back to the period before and immediately after nationalization.
The write-off followed the completion of lengthy court proceedings in the High Court of England and Wales. The legal battle lasted eight years and concluded in November 2025 with a victory for PrivatBank. As early as December, the bank ceased recognizing assets associated with its former owners on its balance sheet. An important point: the net book value of these assets at the time of write-off was zero. This means the economic loss had been recorded earlier through provisions formed against non-performing loans. The December step formally and legally closed what had long been considered unrecoverable in practice.
How PrivatBank’s Indicators Changed
After derecognizing UAH 140 billion in assets, the share of non-performing assets in PrivatBank’s total portfolio declined from 59.4% to 10%. For a bank that for years remained the leader in NPL volume and one of the main sources of negative system-wide statistics, this marks a qualitative shift in perception. The bank separately emphasized that within the portfolio formed after nationalization in 2016, the level of non-performing loans stands at 3.3%. This figure is critical in assessing current lending quality, as it separates the legacy problem layer from newer credit practices. As of early December 2025, PrivatBank’s total loan portfolio amounted to nearly UAH 378 billion. For comparison, Oschadbank held UAH 194 billion, and Ukreximbank UAH 143 billion. At the same time, PrivatBank’s non-performing loans reached nearly UAH 169 billion, compared with UAH 62 billion at Oschadbank and UAH 39 billion at Ukreximbank.тIn relative terms, PrivatBank’s NPL ratio as of December 1, 2025, stood at 44.7%. This was among the highest in the group of largest banks: Bank Alliance recorded 43.2%, followed by state-owned Sense Bank at 33.3%. Oschadbank and Ukreximbank reported 31.9% and 27.4%, respectively. After the December write-off, this indicator at PrivatBank dropped sharply.
PrivatBank is so large that its accounting decisions significantly affect system-wide statistics. The National Bank reported that due to the derecognition of old non-performing assets at PrivatBank, the NPL ratio in the banking system fell from 24% to 14% as of January 1, 2026. The NBU also provided breakdowns by segments: in state-owned banks, the NPL ratio is now below 20%; in privately owned banks with Ukrainian capital, 8.4%; and in banks with foreign capital, 6.5%. The regulator describes these as the lowest levels in more than 15 years. This is not merely cosmetic. High NPL levels distort comparative assessments, complicate financial reporting interpretation, and create reputational pressure. When the largest bank shows an abnormally high share of problem loans, the perception often spreads to the entire market, even if the issue is historical.
How the Problem Accumulated
According to NBU data, PrivatBank’s non-performing loans totaled UAH 2.3 billion in 2006. By January 1, 2016, this figure had grown to UAH 31 billion. The most dramatic increase occurred after nationalization: by January 1, 2017, NPLs reached UAH 169 billion. Peak levels were recorded on January 1, 2019 UAH 245 billion. Subsequently, the figure declined and mostly fluctuated around UAH 170 billion. As of December 1, 2025, it again stood at UAH 169 billion. The dynamics of the NPL ratio are even more telling. From 2006 to 2016, the share of non-performing loans ranged between 6% and 21%. On January 1, 2017, it jumped to 77%, and a year later reached 88%. That meant nearly 9 out of 10 loans were non-performing. The ratio gradually decreased afterward, reaching 44.7% by December 1, 2025. The December write-off removed a significant portion of the oldest problematic layer.
One of the key reasons the write-off became so noticeable is taxation. The National Bank explained that due to the derecognition of assets, PrivatBank accrued additional corporate income tax, doubling its tax expenses and reducing profit after tax. The bank specified the figure: under the Tax Code, additional corporate income tax liabilities amounted to UAH 37.5 billion. As a result, approximately UAH 59 billion in corporate income tax is expected to be transferred to the state budget for 2025. Profit after tax is projected at UAH 29.1 billion. This matters to the state in several ways. First, as a state-owned bank, PrivatBank directly contributes to budget revenues through corporate income tax. Second, balance sheet cleansing reduces distortions in financial reporting that had persisted for years due to legacy loans. As of December 1, 2025, provisions for non-performing loans totaled UAH 170.13 billion. By early January 2026, they had fallen to UAH 20.55 billion. Provisions for problematic corporate loans decreased most significantly from UAH 163.95 billion in December 2025 to UAH 14.48 billion after the write-off.
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What This Means for Clients
For retail and corporate clients, the change is primarily statistical rather than operational. The written-off loans had been provisioned back in 2016, meaning the economic impact had already been absorbed. Day-to-day operations, service quality, payment processing, and lending accessibility are not directly affected. Lending volumes depend on liquidity, borrower quality, and interest rates. The formal write-off of legacy problem assets does not automatically create additional lending capacity nor signal a shift in credit policy.
For years, PrivatBank simultaneously held the largest loan portfolio and the highest NPL burden. This created a disproportionate statistical image, even though much of the issue related to legacy loans unrelated to current management practices. Reducing the NPL ratio to 10% removes this reputational distortion. The bank now presents a clearer portfolio structure and more transparent financial reporting. Experts also suggest that balance sheet cleansing may form part of a longer-term preparation for potential partial privatization. Such a process typically takes three to five years and requires transparent indicators, a low share of non-performing assets, and a well-structured portfolio history.
The write-off of UAH 140 billion in “dead” loans is not about new losses but about closing a long-standing problematic layer that had distorted the financial profile of the country’s largest bank and weighed on system-wide statistics. For PrivatBank, it means a sharp reduction in non-performing assets from 59.4% to 10% and a clearer financial picture. For the state, it brings UAH 37.5 billion in additional corporate income tax and roughly UAH 59 billion in total tax payments for 2025. For clients, it means no changes in everyday banking operations, since these loans had been provisioned long before the December write-off.
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